BCG’s Sustainable Economic Development Assessment evaluates how effectively countries convert wealth into well-being relative to other countries—and raises important questions in the field of development.

SEDA’s measure of well-being is based on three elements that comprise ten dimensions with 43 indicators gleaned from publicly available sources. The data set covers 148 countries plus Hong Kong, which is an administrative region of China. (For the sake of simplicity, we refer to all entities in our data set as “countries.”) It contains a total of nearly 50,000 data points. The choice of indicators was not intended to provide a comprehensive coverage of issues in each dimension; that would have required many more indicators, with large overlaps and correlations. Rather, the goal was to include enough indicators to characterize the dimension and capture differences across countries.

The first element, economics, comprises three dimensions that include seven indicators. The second element, investments, comprises three dimensions that include 21 indicators. The third element, sustainability, comprises four dimensions that include 15 indicators.

This includes a small number of imputations to fill in the 5.8 percent data gaps in the original sources.

Current Level and Recent Progress

We analyzed overall well-being and each of the ten dimensions along two time horizons:

Current level is a snapshot resulting from the normalization and weighting process described above, using the most recent data available.

Recent progress measures the change in current-level data for the most recent seven-year period for which data is available. For most indicators, the time frame we analyzed to measure recent progress is 2006 to 2013.

Median Scores

We used median scores—rather than averages—in charts and references throughout the report. When mapping all 149 countries, we used the overall median score to generate the chart quadrants. There are significant differences in the median scores across dimensions and between current-level scores and recent-progress scores—reflecting the different nature of the indicators and their ranges. (See Table 1.)

Coefficients for Wealth to Well-Being and Growth to Well-Being

We used two coefficient measures to understand how effectively countries are harnessing their wealth and growth. The first is the wealth-to-well-being coefficient, which compares a country’s current-level SEDA score with the score that would be expected given its per capita GDP as measured by purchasing-power parity. The “expected” score reflects the average worldwide relationship between current-level scores of well-being and per capita GDP as estimated by the best-fit regression line, in this case a second-order polynomial regression. Countries with a co-efficient greater than 1.0 deliver higher levels of well-being than would be expected given their GDP levels, while those with coefficients less than 1.0 deliver lower levels of well-being than would be expected.

The second is the growth-to-well being coefficient, which compares a country’s recent-progress score with the score that would be expected given its GDP growth rate. We use real GDP as the best comparable measure of economic expansion and calculate growth rates from the slope of the least-squares, best-fit line for the seven-year period in the recent-progress analysis. The “expected” score reflects the average worldwide relationship between recent-progress scores in well-being and GDP growth rates as estimated by the best-fit line, in this case a simple linear regression. Again, countries that have a coefficient greater than 1.0 are producing improvements in well-being beyond what would be expected given their GDP growth rate over the seven-year study period. (See Tables 2 and 3.)